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Wyckoff Trading Method
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Wyckoff Trading Method

  #1201 (permalink)
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supermht View Post
would you mind postig a chart?

Um well apparently I can't post images until I have a post count of 5. So here is number 2. Unless there is a different way of attaching a chart--I have a jpeg image saved.

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  #1202 (permalink)
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ukdesi View Post
This is my first post on this site, but I do trade via the Wyckoff method. On NLY, the overall price structure on the daily and weekly charts is bearish IMO. If you play a long here, I don't know that it will break the 10.60-10.80 level, which is where primary bearish trend line resistance lies and also 50 day EMA resistance.

The selling climax doesn't have a long shadow, and the paltry move up on increased volume could be absorption (selling) rather than buying. If I was going to buy here, I'd do it with a short-term mindset and before taking that position I'd want to see more basing (accumulation) to fuel the move up. JMO.

Why would you want the sell climax to have a long shadow?

After Monday's pullback I am a bit torn now as to what is going on here.

1. After the sell climax of Nov.28th price found secondary test lows on lower volume only to rise up above the price level of that climax and test the 10.30 resistance. This is typically seen when there was professional buying within the selling.

2. Price pulls back, but on lower volume, which at that time plays more into the idea that supply is drying up.

3. This is where it get confusing for me. Price moves up nicely over a two day period and on Dec.18th it re-tests that 10.30 on extremely high demand after the FOMC announces mortgage rates will not change for while (NLY is a mortgage REIT). However, the close of the bar suggests there was distribution within the buying.

It pulls back hard the very next day of Dec. 19th with elevated almost sell-climax sized volume and after the market close they announce their dividend has been cut from .35 to .30. It is naturally assumed this is a bad news event. Low and behold the next two days it moves back up again to re-test 10.30 on high demand volume. The finish on Dec. 23th didn't reject the 10.30's as harshly as it did back on Dec.18th. Volume on both days were similar, except the bar was smaller on Dec.23rd.

So yes. I am wondering about distribution still taking place. I watched this thing on Dec.23rd and they really piled on the ask once it re-approached 10.30 ...... and yet it's tested 10.30 three times while making "higher lows" along the way.

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The other thing is the primary trend is drawn here on the weekly chart. It's not at 10.80 ....... more like 11.30. The wicks on the candles suggests distribution is still taking place. Ultimately, I'm leaning towards it suggesting that more "basing" is needed as you mentioned. The move up to the 10.30's looks to be the automatic reversal that set the creek and then the campaign begins.

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Last edited by Rock Sexton; December 25th, 2013 at 01:04 PM.
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  #1203 (permalink)
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Then when I zoom in onto the 2 hour ..... Demand clearly increased from the first time it tested 10.30 on Dec. 10th to the second time on Dec.18th. However the upper wick is a signal of distribution. A sell climax occurs and based on the stop volume and subsequent move back up to the 10.30's it was bought into.

A third rejection of 10.30 takes place. Volume on the pull back is light, however the session closed at 1pm for Christmas Eve.

Really waffling back and forth on this one.

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  #1204 (permalink)
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Rock Sexton View Post
Why would you want the sell climax to have a long shadow?



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"The selling climax doesn't have a long shadow, and the paltry move up on increased volume could be absorption (selling) rather than buying. If I was going to buy here, I'd do it with a short-term mindset and before taking that position I'd want to see more basing (accumulation) to fuel the move up. JMO."

The selling climax doesn't have a long shadow - A hammer bar with a long wick

Great advice. Looks like you are trying to catch a falling knife. Looking at the chart for 2013 I see the SPX trending up all year and this has been trending down.

However the longer term chart does have a support level at 10, I would wait for another push down & buy only if it starts forming a good hammer bar with bullish rejection of lower prices
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  #1205 (permalink)
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Brutus--I was going by the selling climax that Rock Sexton identified in an earlier chart he posted on the daily time frame. I see the one you pointed out on the weekly, which does have a long wick. I prefer the long wicks as a more clear indication of exhaustion. But honestly I don't consider any of these selling climaxes---at least not within the context of a Wyckoff range--these are much easier identified in hindsight after stopping action and accumulation has taken place. We barely have any stopping action here to begin with.

Rock Sexton--I agree with the weekly trend line resistance you identified at 11.50; but before we can get there we have to get though daily trend line resistance at 10.80 or so. I'll attach a chart when I have enough posts.

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  #1206 (permalink)
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Brutus View Post
Great advice. Looks like you are trying to catch a falling knife. Looking at the chart for 2013 I see the SPX trending up all year and this has been trending down.

I'm not saying this to offend, but that comment really doesn't have any relevance in the grand scheme of what is taking place. Eventually a stock will ....

A: Find value

or

B: It will move too far away from established value and return to it.

The whole "catching a falling knife" can be blanket statement that prevents people from prospering from either A or B. I layer volume by price over my charts in order to help identify these scenarios, but since this is a Wyckoff thread I am not invoking my thoughts on the price distributions.


Quoting 
However the longer term chart does have a support level at 10, I would wait for another push down & buy only if it starts forming a good hammer bar with bullish rejection of lower prices

I'm getting the feeling based on the last three weekly candles that that has a distinct probability of occurring. The weekly chart seems to indicate that the move off of the 9.66 level was just an "automatic reversal" for now. That channel I drew on the weekly seems pretty obvious though.


Last edited by Rock Sexton; December 25th, 2013 at 01:40 PM.
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Monthly chart shows a stopping volume candle forming .....

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  #1208 (permalink)
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Rock Sexton View Post
Monthly chart shows a stopping volume candle forming .....

Wow, so many contrasting opinions right now. Well your analysis should be based on the kind of trader you are- Scalper, Long term investor, Swing trader etc. The focus should not be on too many time frames, it makes for confusion. Focus on one or a few, make your analysis, and then plan what you would do if you are right and what else you would do if you are wrong.

From a daily time frame perspective I have made an analysis of how I see things. The market might not be ready to go up, there might be further accumulation, it might want to do a/or several low volume retest(s) of the selling climax, with seeming dullness or inactivity, but the indication I see on the daily time frame is bullish, so if I were to trade this I would like to see a high volume spring at the higher support area, with the target determine by how long it builds a cause for the move.

To be bearish I would like to see a wide down bar with much volume breaking the current lower support with an inability to rally, or a low volume rally. and/or an upthrust at the highs with consistent reluctance to go higher plus lower resistances.

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  #1209 (permalink)
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Well I personally look at stopping action as something that happens over a period of time where the down trend stops and price begins to go sideways and show characteristics of accumulation.

If that one month is the basis for stopping action, then I'd say the daily chart doesn't provide enough price development for a full range analysis. So I'd analyze an intra day chart for evidence of stopping/accumulation, with a short-term pop in mind. You've done some analysis on an intra day basis-- it wouldn't meet my criteria for accumulation (not yet at least), but of course it could still go up--just doesn't pass my tests.

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  #1210 (permalink)
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Daily chart--to me a short at 10.70 looks more interesting.

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